Even though the nominal price tag isn’t really important when it comes to stocks, investors nonetheless are attracted to low-priced shares. And although many stocks that can be found on the cheap often are either circling the drain or are questionable penny stocks that will never get legs, there’s a number of affordable companies with completely legitimate businesses that have the potential to reach higher ground.

And when those stocks happen to be undervalued — that’s all the better.

Today, we’re looking at five stocks that are affordably priced at $5 per share or less. Any sub-$5 stock naturally has some inherent risks, so these names can’t be treated like the most predictable of huge (and high-priced) blue-chip stocks. However, all five names are undervalued, and potentially poised for outsized gains:

Sirius XM Radio

10/24 Close: $2.89/share

In spite of mounting competition from all directions (Internet radio, smartphones and more), satellite radio company Sirius XM Radio (NASDAQ:SIRI) continues to add revenue-bearing subscribers, month in, and month out.

As of the end of the prior quarter, its subscriber headcount was at 22.9 million, 10% higher than it was a year earlier. It’s simply amazing given the plethora of (sometimes free) competition. Even more amazing is that Sirius has been able to do what Pandora (NYSE:P) can’t … reliably turn a profit. Sirius XM swung to a profit in 2010, and has grown the bottom line every quarter since.

Shares have reflected that growth, too, hitting new multi-year highs in just the past few days. They’re perhaps a tad frothy to step into in the immediate future, but the company has nothing left to prove about its staying power.

Fortress Investment Group

10/24 Close: $4.29/share

In retrospect, asset management company Fortress Investment Group (NYSE:FIG) couldn’t have gotten into the business at a worse time — in 2007, right as the red-hot bull market began to implode. It’s been nothing but losses from day one for the company, and by extension, for investors.

Have you seen the top and bottom lines for the past two quarters, though? Revenue has stabilized, and those nagging losses were whittled away into a small profit of $4.71 million in the second quarter of this year. Assuming Fortress is still on that path, it certainly makes the forward-looking P/E of 7.6 seem plausible.

United Microelectronics

10/24 Close: $1.94/share

Do you know why sales of Apple‘s (NASDAQ:AAPL) iPhone 5 have been considered anemic? It’s not a lack of demand — it’s a lack of supply. Apple has realized since the smartphone’s debut that its suppliers just couldn’t make enough of the needed components to assemble as many iPhones as the company could have sold.

Great, but what’s that got to do with United Microelectronics (NYSE:UMC)? United Microelectronics was one of the companies Apple tapped when it couldn’t get enough of what it needed from Qualcomm (NASDAQ:QCOM) and Taiwan Semiconductor Manufacturing (NYSE:TSM).

Although Qualcomm and TSM have almost certainly cranked up their capacity in the meantime, United Microelectronics might have just worked its way into the inner circle of Apple’s ecosystem.

Chimera Investment

10/24 Close: $2.65/share

The name might be a tad misleading, as Chimera Investment (NYSE:CIM) actually is a mortgage REIT. That doesn’t change anything about the fact that it’s (1) priced at less than three bucks a share, and (2) is stunningly underappreciated.

Chimera primarily owns residential mortgage-backed securities, meaning it buys bundles of mortgage loans made to regular people living regular lives. Yes, it was a miserable business to be in when the real estate and lending market was unraveling in 2008. CIM has performed a 180-degree turnaround in the meantime, though, allowing Chimera to cultivate what has become a fairly reliable 14% dividend yield.

Critics of mortgage REITs correctly point out that further dips in interest rates could crimp the amount of money Chimera Investment Corporation can generate for shareholders. But how much more could interest rates fall? Short-term rates are as close to zero as they can be without actually being zero, so there’s not a lot of downside. Conversely, if interest rates rise — and they eventually will — Chimera’s margins actually will widen.

Alcatel-Lucent

10/24 Close: $1.06/share

Last but not least, French telecom equipment maker Alcatel-Lucent (NYSE:ALU) makes the list of five undervalued stocks under $5.

From a distance, Alcatel-Lucent looks troubled. Shares were trading above $6 a year-and-a-half ago, but now are hovering just above $1. Usually such a plunge in a stock would coincide with a major headwind for a company’s top and bottom line. We saw a hint of that with Alcatel, at least on the top line — 2010’s revenue of $21.5 billion slumped to $19.9 billion last year, and 2012’s top line is likely to slide to $18.72 billion. Thing is, the losses actually have been whittled down as the top line has contracted, meaning the company is doing more high-margin business.

Though still mentally off-limits to some, ALU actually is in something of a sweet spot in its turnaround story … before it has become obvious, but at least after a light starts to shine at the end of the tunnel.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.